The Strategist

Investors pour money in oil ETFs

04/30/2020 - 03:14

International investors are actively increasing their investments in oil. According to Emerging Portfolio Fund Research (EPFR), the respective funds have received $ 4 billion over the past week, and over $ 11 billion - over the past five weeks. However, these volumes are not enough to compensate for the falling oil demand due to quarantine measures taken around the world.

Paul Lowry
Paul Lowry
EPFR data indicate a high demand from international investors for oil investments. According to Bank of America’s data (taking into account EPFR data), for the week ending April 22, international investors invested nearly $ 4 billion in oil exchange funds. This is one and a half times more than the previous week. Since the beginning of the year, over $ 16 billion has been received in profile funds, of which more than $ 11 billion has been received over the past five weeks.

However, the current inflow of investments is not enough to reverse the negative trend in the oil market.

According to Reuters, over the past five weeks, the price of North Sea Brent oil has halved, falling to $ 20 per barrel. Since the beginning of the year, prices have fallen three times. Pressure on oil quotes is exerted by real demand, which has fallen due to quarantine measures taken around the world. According to the forecasts of the International Energy Agency, in April demand will fall by 29 million barrels.

Considering that the main consumer countries are in no hurry to remove all restrictions in the near future, the imbalance may persist in May. The most acute situation with an oversupply is felt in the United States, where problems are exacerbated by the lack of free storage facilities. Under such conditions, the price of WTI oil for the first time in history fell into the negative area.